November 17, 2025 | Why New York City Needs a Public Bank

from ScheerPost

We will build a city-owned bank — not to serve shareholders, but to serve you. A bank that invests in housing, in transit, in climate resilience. A bank that puts our money to work for our people.”
— Zohran Mamdani, Victory Speech, Nov. 4, 2025

New York City has elected a mayor who dares to challenge the status quo. Zohran Mamdani swept into office on a platform of affordability, municipal ownership and economic justice. But Mamdani’s plan to fund his reforms through $9 billion in new taxes on corporations and high earners is already bumping up against political and fiscal realities.

Income taxes are the province of the state, not the city, and NY State Governor Kathy Hochul is standing firm in her resistance to raising them. Pres. Trump has vowed to “cut off the lifeline” to the city, pledging to reduce federal aid to the legal minimum. And Mamdani’s proposals are said to be triggering capital flight. Wall Street is mobilizing. The city’s budget is strained. So where will the money come from?

The Public Bank Alternative

Raising taxes on the wealthy is not Mamdani’s only funding proposal. His vision for economic justice and municipal ownership also includes a public bank. In his June 2025 primary speech, he pledged to create a city-owned bank to fund housing, transit and climate resilience — calling it “a tool to break Wall Street’s grip on our future.” In his victory speech on Nov. 4, 2025, he again referenced public banking as a pillar of his economic agenda. He described the election as “a mandate for change” and a rejection of politics “that answers only to the few.”

These statements align with his legislative record. Mamdani was a co-sponsor of Assembly Bill A3352, the New York Public Banking Act, and he has consistently advocated for public finance alternatives during his tenure in the State Assembly.

What Is a Public Bank and What Can It Do?

A public bank is a bank owned by the people through their government (local or federal). It can hold public funds, issue loans for public purposes and reinvest profits in the community. This is not a utopian idea; it’s a proven model. The proof is in an unlikely state, conservative North Dakota.

While New York City entrusts its public funds to Wall Street banks — paying billions in interest to private lenders — the state of North Dakota has taken a radically different approach. Its public funds are held in the Bank of North Dakota (BND), a state-owned institution that reinvests profits locally, finances infrastructure, and cushions the blow of economic shocks. While NYC relies on private-profit-driven banks to finance public needs, BND operates as a public utility — prioritizing resilience, affordability and sovereignty.

How North Dakota Escaped the Shutdown

This difference has become particularly evident during the 2025 federal government shut down. While other states suffered SNAP disruptions and budget shortfalls, North Dakota leveraged BND funds without waiting for Washington:

• No state employees were furloughed, despite federal funding interruptions.
• The BND launched the Furloughed Federal Employee Relief Program, issuing nearly $1 million in emergency loans to federal workers, including those at Minot and Grand Forks Air Force bases.
• It rolled out a $1.5 million food assistance package to offset SNAP disruptions.
• It developed a debt refinancing program for farmers, responding to high interest rates, low commodity prices, and inflation.

BND’s 2024 Performance: A Model for NYC

According to its latest annual report, the BND has over $10.8 billion in assets and more than $200 million in net income, much of it reinvested in agriculture, education, and sustainable  development. More than $1 billion was transferred to the state’s general fund and special programs through 2018, most of it in the previous decade. That is a substantial sum for a state with a population that is only about one-tenth that of New York City (780,000 versus 8.3 million). The BND keeps interest payments in-state, funds infrastructure and cushions shocks that would seriously impair other states’ budgets. In October 2024, Truth in Accounting’s annual Financial State of the States report rated North Dakota #1 in fiscal health, with a budget surplus per taxpayer of $55,600.

The average ROE(return on equity) of the BND from 2000 through 2023 was 19.4%. Compare JPMorgan Chase (JPM), by far the largest bank in the country, with 2.4 trillion in deposits. Its average ROE from 2000-23 was 11.38% over the same period. For a detailed breakdown, see here. New York City pays an estimated $4 billion annually in interest to private banks — money that could instead be recycled through a municipal bank to fund housing, transit and clean energy.

How could the BND have outperformed JPM, the nation’s largest bank? The BND has substantially lower costs and risks than private commercial banks. It has no exorbitantly paid executives; pays no bonuses, fees, or commissions; has no private shareholders, branches or ATMs; and has low borrowing costs. It partners with local banks in “participation loans,” avoiding loan origination costs. It engages in old-fashioned conservative banking and does not speculate in derivatives, so it has no losses or risk from derivative trades gone wrong. It makes productive loans that are non-inflationary, avoiding loans that create bubbles and crashes.

An engaging video explaining what a public bank can do is on the website of the Public Bank NYC Coalition, which advocates for a NYC public bank. Another informative series of explanatory videos is on the Public Banking Institute website here.

How to Capitalize the Bank

New York City is well-positioned to capitalize a public bank. According to the Comptroller’s FY2025 report, the city began the year with over $10.4 billion in cash-on-hand, and it maintains an average balance of $10.1 billion. Its annual revenues exceed $100 billion, and its total assets—including real estate, infrastructure and pension funds—are even greater.

The pension funds alone are a vast reservoir of potential capital — managing nearly $295 billion across five systems as of mid-2025. Scott Baker, Economics Editor at OpEdNews and New York State Coordinator for the Public Banking Institute, observes in a November 2025 article that current pension investments are seriously underperforming after fees. Former NYC Comptroller Scott Stringer produced a report showing that for the 10-year pension period ending in 2015, the NYC pension funds generated zero ROI (return on investment) when he included $2.5 billion in management fees.

In 2024, the city contributed $9.6 billion to the funds, while employees contributed about $2.5 billion. Offset by $2.5 billion in management fees, the total contribution for investment was $9.6 billion, the sum coming from the city. Assuming a 10% capital requirement, this $9.6 billion could capitalize $96 billion in loans. $9.6 billion is only one-third of 1% of the total assets of the NYC pension funds, a very modest investment that could generate an average 19% ROI if used to capitalize a public bank on the BND model. In fact, $1 billion would be enough to capitalize a bank the size of the BND.

Banks, Not the Government, Create the Money Supply 

How can a public bank lend billions more than the capital it actually has? The answer is in a little-known secret of banking: banks don’t lend existing money. They create it. When a bank issues a loan, it doesn’t hand out cash from a vault. It creates a deposit in the account of the borrower, backed by the borrower’s promise to repay the loan with interest; and these deposits are counted in the money supply. Roughly 95% of the U.S. money supply is created in this way — by private banks, for private profit.

A public bank does the same thing, but in the public interest. It monetizes future productivity — housing that will generate rent, roads and rail that will transport workers, solar panels that will lower energy costs. To “monetize” means to turn future productivity into something that can be spent now — e.g. spent on the labor and materials necessary to create the products that will repay the loan. The money is created into existence, circulates through the economy and is extinguished upon repayment.

Isn’t That the Sort of “Money Printing” That Drives Up Prices? 

No. Price inflation is a function of supply and demand: prices go up when too much money is chasing too few goods. Injecting new money (demand) does not drive up prices as long as the money creates new supply to absorb it, keeping prices stable.

China’s development model illustrates this principle. Over the past 29 years, its money supply has increased by a whopping 5,500%. Yet price inflation has remained modest, because the increase in money was matched by an increase in goods and services. The China Development Bank — one of the largest banks in the world — along with other Chinese public banks fund infrastructure, housing and manufacturing, creating real assets that absorb the new currency in the marketplace.

Taking on Wall Street 

The New York Public Banking Act (S1754/A3352), which Mamdani co-sponsored in the NY Assembly in 2023, would allow cities in the state to obtain charters for their own public banks. Modeled on California’s AB857, it has broad legislative support. However, it remains stalled in the legislature — likely due to pressure from entrenched financial interests. New York State is home to some of the largest and most powerful banks in the world, and they are in the heart of New York City.

New York City is also the home of the most powerful branch of the Federal Reserve, the New York Fed, and like all Fed branches, it is 100% owned by the banks in its district. Because of its proximity to Wall Street and its operational responsibilities, the New York Fed is often considered the heart of the Federal Reserve System. Its Wall Street owners

are not likely to relinquish control of that megacity’s finances without a fight.

To operate in the banking system, the new city-owned bank will need a Federal Reserve master account. Without it, the bank cannot clear payments or interact with the broader financial system. The bank will also need “reserves,” either as “vault cash” (Federal Reserve notes and coins distributed by the Fed) or as digital reserves originated by the Fed. The bank can get the needed reserves from the city’s deposits held by the bank, but to get a master account is a trickier issue. The Fed is now requiring that new banks be FDIC insured. The BND, which was founded in 1919 and was grandfathered in, does not have or need FDIC insurance. The state is virtually its only depositor, and FDIC insurance would cover only $250,000 of its $7.6 billion in deposits from that single entity. But the current FDIC requirement could be a chokepoint for New York City.

Mamdani also has powerful supporters, however, and he would have the ability to challenge the Fed and the FDIC in court if necessary, following the precedent set by Custodia Bank and others seeking equal access to the payments system. The Custodia bid for a master account failed — likely because it threatened to siphon deposits out of the U.S. dollar system into cryptocurrencies, destabilizing Wall Street’s grip on liquidity. But public banking is not crypto. It is not speculative, extractive, bubble-producing, inflationary or offshore. It is sovereign infrastructure designed to channel capital into the real economy — into goods, services, and livelihoods that nourish communities. Public banking keeps money local and accountable. It’s not a drain on liquidity but a new source of available funds.

Recapturing the Money Power
A recent proposal by the Money on the Left Editorial Collective titled “Democratic Public Finance: A Radical Vision for Mamdani’s New York City” urges the incoming Mamdani administration to consider legal action to challenge federal monetary constraints. While not officially affiliated with the campaign, the authors build on Mamdani’s platform and offer strategic guidance for deepening public finance reform, including by expanding municipal credit capacity through public banking. They propose a long-term campaign to contest what they call “deep legal structures,” including balanced budget amendments and constitutional interpretations that enforce austerity. These challenges, they argue, are essential to unlocking the full crediting capacity of municipal governments. The authors conclude:

Without a doubt, Zohran Mamdani’s vision for New York City represents the most politically savvy and fiscally robust undertaking in decades. This document argues that Mamdani’s transformative vision can be further enhanced if it directly confronts the myth of money scarcity and frames our collective capacities as the source of shared prosperity.

Freed of regulatory blockages, a New York City public bank could hold NYC’s public deposits; finance housing, transit, and energy; reinvest profits locally; and reduce reliance on Wall Street middlemen. In short, it could fund Mamdani’s vision without triggering capital flight.

While businesses are fleeing NYC, North Dakota was rated by Forbes Magazine the best state in the country in which to start a business in 2024. It escaped the 2025 shutdown by reclaiming the power to create money as credit through its own state-owned bank. NYC can fund its future by doing the same.

Ellen Brown November 17th, 2025

Posted In: Web of Debt

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